Money Tip: Christmas is Over, Here’s What You Do Now

Now that Christmas is over, and many of you are coming down off the Holiday clouds and getting your feet back into the workforce (except for me, I have off till January 3rd :)), now is the time to start preparing for next years festivities.

Why so soon? Well a lot of people tend to wait until last minute on a lot of different things, gift buying, holiday funds, figuring out what gifts to even get, and a lot of it is entirely unnecessary stress.

I have made the holidays virtually stress-free in my home for the last several years by following some basic principles and preparations that I will share with you. Perhaps it will save you some stress, or perhaps it will help prevent you from going into debt for the holidays.

1. Create a Christmas Budget.
Make a list of all of the expenses you had this year and how much you want to limit yourself on gifts. Include everything from food to supplemental decorations for that new wreath or that strand of lights you need to replace. You know how much you’re going to spend on a christmas tree, you know how much your holiday food or christmas cards are going to cost, but a lot of people don’t budget for these extra expenses.

Here’s my personal break-down:
Tree: $20 (a local farm here only charges this much every year, so I know what to bring)
Decorations: $30
Food $50
Christmas Cards for Dad: $80 + $40 in stamps = $120
Gift Money for Dad to buy presents with: $200
Gifts to spend on Dad: $200
Gifts for the sweetheart: $200
Gifts for my sister: $50
Gifts for other family: $20 each at 10 family members: $200
Gifts for friends: $20-$50 each at 4 major friends: $200

Total money I will start saving now and have ready for next year: $1300

Obviously this list could change and fluxuate, so I try to be flexible with it, but it’s a great start on having an idea of what to expect for next year.

2. Save up gradually.
$1300 divided by 12 months comes to $108/month to put away. Since I get paid twice a month, that comes to about $54/paycheck for me that I just sock away automatically each paycheck so I don’t even think about it. 12 months later I am ready to go without any worries about where I am going to get money for the holidays.

Saving up for the holidays gradually takes away a significant stress when the stressful holiday season comes around. They used to call them Christmas Clubs, but I know many banks do not do them anymore, so I do it myself and just call it my “Christmas Fund”.

3. Put Your Christmas Fund in a High Yield Savings Account
I use ING for all of my fund needs such as my Christmas Fund. However, other banks like SmartyPig have a lot higher interest rate and even allow multiple people to submit deposits into it as sort of a social networking type of banking. SmartyPig is also a goal oriented type of savings account, which is exactly what a Christmas Fund is. Create your own Christmas Fund through SmartyPig or ING and get a little interest from what you put away.

4. Use Credit Cards if you are disciplined to get Reward Points
If you are already saving up money into a Christmas Fund, then there’s no need to go into debt for the holidays. However for those that are disciplined, there is a pretty nice advantage to using your credit card reward points to get extra cash. The stipulation though is that you would need to pay off the card each month with the money from your Christmas Club when you use it to make holiday purchases. You get the reward points, but none of the debt. I don’t recommend this method for everyone, some people could get in over their heads.

5. Plan your gifts around your budget, not your budget around your gifts
Because we have already set a Christmas Budget above, we now have a window in which we know what sort of gifts we can buy. Many kids these days can want some pretty expensive gifts, XBox, iPods, video games like Skyrim, and while it would be nice to get them everything, it’s not practical or even good parenting (in my personal opinion). With a set budget, you can plan one or two big items, and fill in the excess with smaller items until you reach your budget limit. It gives you an idea of what to purchase to fit into that budget window, instead of worrying if you’ve spent more for one child over the other, or went overboard with your gift purchases.

This is also a good practice to teach your children as they get older and start planning their budgets as well.

6. Keep tabs on gift ideas throughout the year from loved ones.
I use Amazon.com’s universal wishlist feature to keep track of gift ideas throughout the entire year so I’m not stuck a few weeks before Christmas trying to figure out what to get people. If my father mentions something in May that he would like to have, I add it to a private wishlist I specifically created for his gift ideas, and then when the holidays roll around I have a gift idea ready to go for him. I’ve created individual private lists for important people in my life for this very purpose. Since Amazon.com now allows you to add items from any website into their wishlist function, I can pull ideas from all over the internet into one central location for everyone on my shopping list. This is not just good for Christmas, but birthdays, anniversaries, fathers day, etc.

Other alternative ideas for keeping track of gift ideas throughout the year is something as simple as Google Docs that you can access from anywhere you have an internet connection.

7. Start shopping early like around October
This year I had all of my holiday shopping done in October, but I know a lot of people still try to take advantage of holiday or Black Friday deals. While the savings may be nice, the stress from shopping during the holidays is not something I want to deal with, so I make sure to finish up my shopping in October.

I’ve also bought gifts throughout the year and put them away for the holidays, especially if I see something on sale. Because I’ve got money I’ve been putting away since December, if I see something my father really wants on sale in May, I most likely have enough money already saved up to pick it up early and put it away till Christmas.

8. Donate to Charity
Now that Christmas is over, it’s a great time to donate to charity for your year end tax deductible donations. Charity is always a great way to end the holiday season, you can even budget for it in our Christmas Budget list from #1. Alternatively you can devote any excess Christmas Funds to go towards charity at the end of the year.

What holiday tips do you have to prepare for next years holiday season?

Crystal Groves is a farmer, web developer, musician, blogger, and personal finance enthusiast from the back hills of Maryland and Pennsylvania. She started Money Drain as a project to encourage people interested in fixing their financial situation to share their stories and learn from the stories of others. We all make mistakes, but in order to change we have to make changes.